WeeklySSESSMENTS: China PP Prices Week Starting July 27

Author: SSESSMENTS

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Positive Movements In Futures Market Unable To Change Spot PP Price Direction

Local and import offers moved in the same direction week-over-week
Converters are unkeen to make purchases
Market players opined that local PP prices will only fluctuate in a limited range

Market players told SSESSMENTS.COM that positive movements seen in the futures market were unable to change spot PP price direction. At the beginning of the week, local PP prices dropped between CNY100-175/ton ($14-25/ton) compared to last week. The downward adjustments were made considering the softer futures market last week, the traditional low season, supply outlook in August, and the escalating tension between China and the U.S. The prices did not bounce up in line with stronger futures prices on Monday and Tuesday since most traders want to move cargoes on hand with haste, hence, prefer to maintain stable offers compared to Monday’s levels. On Tuesday, September 2020 PP futures on the Dalian Commodity Exchange increased by CNY189/ton ($27/ton) compared to the settlement recorded on last Friday, July 24.

From the import market, offers for PP Homo Raffia from the Middle East decreased between $5-10/ton from last week’s levels. On a biweekly comparison, PP Homo Raffia offers from India were adjusted down by $5/ton. Offers for the same product from the United Arab Emirates also went down by $5/ton, but compared to offer levels at the beginning of July. On the other hand, on a monthly comparison, August shipment offers for PP Homo Injection from a Saudi producer increased between $60-70/ton while offers for PP Block Copolymer went up between $50-60/ton. SSESSMENTS.COM was informed that another Saudi producer does not have offers to China this week as the allocation has been sold out. The next offers from the producer will be announced on August 8. A South Korean producer also skipped offering to China this week because the producer opined it would be difficult to conclude deals due to weak buying sentiment.

Demand for PP in China sags as at the moment is the traditionally low season for PP end-products, thus, converters are unkeen to make purchases. In addition, most buyers prefer to wait for lower offers. On the supply side, the inventory of the major polyolefins producers in China is considered low. Based on SSESSMENTS.COM’s data, as of July 29, the producers’ inventory stood at 645,000 tons, a reduction of 95,000 tons compared to Monday’s level. According to market players, the level is the lowest one since the 2020 Chinese New Year Holiday. For import cargoes, a Saudi producer is reported having a tight supply for August shipment to China. On the plant news, Sinopec Maoming Petrochemical resumed production at the company’s 170,000 tons/year PP unit on July 27. Market talks have it that some producers that planned to bring new PP plants on stream in July delayed the start-up to August, including Zhongke Petrochemical.

Looking ahead, market players in China believe that PP supply will increase in August as most producers have finished maintenance shutdown. Meanwhile, demand is predicted to remain slow due to the traditionally slow season. However, as the local inventory is quite low, local PP prices will only fluctuate in a limited range. The players opined to SSESSMENTS.COM that the possibility for both significant increases and decreases is limited.

Local PP offers on cash, EXW China basis (including 13% VAT in CNY term, excluding VAT in USD term)

Origin	Product	Transaction Type	Offers (CNY/ton)	Equivalent in USD/ton
China	PP Homo Injection	Offer Given	7,850-8,000	992-1,011
China	PP Homo Injection	Price List	7,700-7,850	973-992
China	PP Homo Raffia	Offer Given	7,750-8,025	980-1,014
China	PP Homo Raffia	Price List	7,650-7,950	967-1,005
China	PP Random Copolymer Injection	Price List	8,250-8,800	1,043-1,112

Import PP offers on LC at sight, CIF China Main Port basis

Origin	Product	Transaction Type	Offers (USD/ton)
Middle East	PP Block Copolymer	Offer Received	965-1,000
Middle East	PP Homo Injection	Offer Received	960
Indian Subcontinent	PP Homo Raffia	Offer Given	900-910
Indian Subcontinent	PP Homo Raffia	Offer Received	910
Middle East	PP Homo Raffia	Offer Given	920-960
Middle East	PP Homo Raffia	Offer Received	925